This post was originally produced for Forbes.
London-based ClearlySo is an investment banking firm that helps social enterprises raise capital from impact investors, those who seek a social impact along with a financial return. Last week, ClearlySo announced a new impact measurement service for private equity and venture capital funds.
Founder and CEO, Rodney Schwartz, is excited about the new product, which he says will make impact reporting easier. He says, “We launched our impact assessment tool, which, for the first time, specifically addresses the needs of PE/VC firms to measure and report on the impact of their privately held portfolio companies. It does so in a way that is portal-based, efficient, robust, easy-to-use, inexpensive and requires no lengthy questionnaires to be filled out by fund managers or investees.”
Mathew Holloway, the CEO of Q-Bot, a social enterprise client of ClearlySo, says, “Obviously ClearlySo has only recently launched ATLAS, but throughout our work with them over the last year, and more recently with ATLAS, they have created a structure by which we can more effectively and efficiency measure and communicate our impact. These tools have allowed us to set goals and targets for the future and track and report on their progress.”
Q-Bot’s ability to tell their impact story has made a big difference for them, including helping to drive top line growth, Holloway says. “This has added a huge amount of value by aligning the interests of different stakeholders, including employees, investors and customers, and creating a framework by which it can be clearly communicated. This has meant that Q-Bot has been able to have an even greater impact than expected and most importantly demonstrate it. Q-Bot works within the social housing sector where wider societal benefits form part of the procurement process and so has also greatly contributed to the growth of the company and winning of new orders.”
Luke Hakes, Investment Director at Octopus Ventures, has worked as an advisor to ClearlySo during the development of Atlas. He says, “Impact and its measurement is becoming increasingly important to both the VC and PE community and is increasingly high up on the agenda of LPs and indeed retail investors.”
The use for Atlas reaches beyond private equity and venture funds that focus on impact, Hakes notes. “Though we are not an impact investor per se, we are very aware that every investment we make has impact both socially and economically and it makes little sense for us to ignore this. Capturing and measuring the impact our portfolio companies have enables us to work with them to improve areas in which they may be weak and to raise awareness in areas where they are strong.”
Hakes also sees that market as the key to the success of Atlas. “To be successful, ClearlySo needs to help educate an industry which historically has been somewhat skeptical of the term ‘impact.’” He notes that mainstream investors view impact investors as sacrificing returns to do good. “They need to help VC and PE firms understand that by measuring the impact of their investments completed under their existing investment strategies and acting on the findings of that measurement, they have the opportunity to actually improve the performance of those assets and drive returns,” he adds.
Building the new platform has been no small task. Schwartz says, “This was the culmination of nearly 5 years of work, from concept development to implementation. ClearlySo built this tool with and for the PE/VC industry and with their needs and constraints foremost in our minds. The impressive and expert audience responded favorably and our first customer came forward, Octopus Ventures, a leading UK-based VC. Others seem set to follow.”
“When you launch something as a pioneer, something that has never before been attempted, and has been developed in a completely new way, you never know what the outcome will be–or even if the product will work,” he added.
That caveat notwithstanding, he says, “It seems to work extremely well and the market has responded in a very favorable way–exceeding our hopes and aspirations.”
Clearly so plans to market the product across Europe, where there is already growing interest, Schwartz says.
ClearlySo is, Schwartz says, Europe’s largest impact investment bank. He adds, “All of ClearlySo’s clients are great businesses, charities and funds doing something which changes the world for the better at the same time as building successful, valuable and profitable organizations.”
Holloway says, “ClearlySo helped Q-Bot raise a seed investment round in early 2016. During this process we found the team to be highly effective at connecting the company with relevant investors, managing this interest and balancing it with the needs of the business, and supporting the closing of the round.”
ClearlySo didn’t walk away at that point, he says. “Since then they continue to support us by shaping our strategy and offering towards future growth and fundraising needs.”
Schwartz, who got is start on Wall Street back in 1980 working as an analyst at PaineWebber, later started a venture fund focused on fintech before launching ClearlySo in 2008. Schwartz seems to be focusing on impact ahead of profitability, acknowledging that the company, which has 25 employees and targets £1.5 million in 2017 revenue, is not yet profitable. His goal is to drive a 30 percent gross margin.
He describes his focus and strategy on impact, “Every company we help is a high-impact enterprise. We enable them to change the world for the better by getting investors to back them and support their growth. We also help investors to understand the impact of all that they do.”
On Thursday, December 22, 2016 at noon Eastern, Schwartz will join me here for a live discussion about Atlas and the state of the impact investing industry at the end of 2016. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.
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